Want free checking? Set up direct deposit

A study released by Bankrate.com on Monday found that the vast majority of banks still offer free checking accounts. But more of them require customers to meet certain conditions to have monthly fees waived. For example, customers may have to maintain a certain balance or set up direct deposit, in which a paycheck or government benefit is automatically deposited into their account on a recurring basis.

Otherwise, the study found that only 45 percent of checking accounts are free with no strings attached. That’s down sharply from 65 percent last year and 76 percent just two years ago.

Even if customers find a free account, the other fees they run into may be higher.

The average total cost for using an out-of-network ATM rose slightly to $3.81, from $3.74, the year before, the study found. That’s including the fees charged by the customer’s own bank and the ATM operator. The average overdraft fee also rose slightly to $30.83, from $30.47.

The findings were based on a study of banks in the country’s biggest markets in August.

The higher costs come as banks revamp their terms and conditions to adjust to new regulations.

Starting next month, the fees banks can collect from merchants whenever customers swipe their debit cards will be capped. These fees generated an estimated $19 billion in revenue for banks in 2009, according to the Nilson Report, which tracks the payments industry. Several large banks have cited the regulation in ending or scaling back their debit rewards program in the past year.

Banks are also experimenting with new ways to increase revenue. Chase and Wells Fargo, for instance, are testing a $3 monthly fee for customers who want debit cards with their checking accounts.

Another regulation that went into effect last summer requires banks to obtain a customer’s consent before enrolling them in overdraft programs, which often charge as much as $35 per violation.

Previously, it was a common industry practice to automatically sign up customers without giving them a way to opt out.

Consumer advocates said that was misleading because most people assume they can’t spend more than they have in their account.